Samsung Electronics and SK Hynix. [Yonhap]
Samsung Electronics and SK Hynix. [Yonhap]

A court has partially granted Samsung Electronics' injunction request to bar two former employees — key NAND flash chip designers from its memory chip division — from working at SK Hynix, where they moved earlier this year.

According to legal sources Monday, the 31st Civil Division of the Suwon District Court (presiding judge Shin Woo-jeong) partially granted Samsung Electronics' injunction request against two former employees, including one identified as A, on Thursday.

The court ordered A and the other employee not to work for or provide services to SK Hynix or its affiliates until April 30, 2027 — one year and six months after their resignation. It also issued an indirect enforcement order requiring them to pay Samsung Electronics 5 million won ($3,320) per day for any violation.

A and the other employee are mid-level managers who spent more than 10 years in Samsung Electronics' memory chip division handling core NAND flash chip design. The two had access to sensitive technical information, including design directions and development schedules for next-generation products. They left Samsung Electronics in October last year and joined SK Hynix in February.

The central issue in the case was how far to enforce a non-compete agreement the employees had signed at hiring, which prohibited them from joining a competitor for two years after leaving the company. While courts have recently tended to apply strict scrutiny to such restrictions to protect freedom of occupation, Samsung Electronics' arguments were largely accepted in this case.

The court cited several factors in its ruling: that NAND flash chip design technology qualifies as a national core technology or national advanced strategic technology, that the two employees had knowledge of critical design information, and that Samsung Electronics had managed them as designated key personnel.

The court also took into account that the employees had concealed their true plans when resigning — telling the company they were leaving to pursue further education rather than disclosing their intention to join a rival.

"The technology in question appears to qualify as a national core technology or national advanced strategic technology, making it all the more worthy of protection," the court said. "If it were exposed to a competitor, that competitor could shorten the time needed to reach an equivalent level of technology, which would inevitably result in a corresponding loss of competitiveness for the applicant (Samsung Electronics)."

The court added that "there is a need to establish a fair market economic order given the intense competition in the semiconductor sector," and that "even if the non-compete agreement partially restricts the respondents' freedom to choose their occupation, that fact alone is not sufficient grounds to deny its validity."

However, the court reduced the non-compete period Samsung Electronics had sought from two years to one year and six months. "Even acknowledging the need to protect the technology, prohibiting employment at a competitor for two years leaves room for an excessive infringement on freedom of occupation," the court said.


bbo@heraldcorp.com